Which of the following is most likely to reduce the consumption of an exhaustible natural resource?
A)a decrease in monopoly control of the market for the resource
B)government tax policies that give tax breaks to entrepreneurs who search for new reserves of the resource
C)implementation of a price ceiling for the resource below its equilibrium price
D)government macroeconomic policies that lower the interest rate on bonds

Question

Which of the following is most likely to reduce the consumption of an exhaustible natural resource?
A)a decrease in monopoly control of the market for the resource 
B)government tax policies that give tax breaks to entrepreneurs who search for new reserves of the resource 
C)implementation of a price ceiling for the resource below its equilibrium price 
D)government macroeconomic policies that lower the interest rate on bonds

Quizplus · Accepted Answer

Implementation of a price ceiling for the resource below its equilibrium price would reduce the price of the resource, leading to a decrease in consumption as consumers will look for alternatives or reduce their usage. A decrease in monopoly control (choice A) may or may not reduce consumption, depending on how competitive the market becomes. Government tax policies that give tax breaks to entrepreneurs who search for new reserves (choice B) may encourage exploration and production of the resource, leading to higher consumption. Government macroeconomic policies that lower the interest rate on bonds (choice D) would not have a direct impact on consumption of an exhaustible natural resource.

Which of the Following Is Most Likely to Reduce the Consumption